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Thursday, June 27, 2013

Mansueto: The Fund Night Sky Dims

News summary by MFWire's editors

The stars in the fund industry night sky are going out, according to Mansueto.

USA Today interviewed Morningstar's introverted CEO Joe Mansueto on how the fund industry has changed, how it was affected by the downturn and which investors he admires.

When asked how easy it is to start a company like Morningstar today, Mansueto said it's less costly to start because of technological advancements that bring down costs. The greater ease makes it the market more competitive, however.

Mansueto said the mutual fund industry has changed dramatically since he started Morningstar. Funds are not growing as rapidly as they have in the past but the industry is still large:

What we have seen is a disengagement on the part of the individual investor with investing in general. After the 2008-09 downturn in the stock market, there was a downturn across the board in terms of traffic to investment sites. Investors shunned risk, migrated to cash and fixed income, and avoided equity markets. It's not a shunning of mutual funds as an investment vehicle.

The industry is big and more complex but less personality driven now than it was in the 1980s:
As it has gotten bigger, it has gotten more specialized and more complex, which has a downside…The industry was dominated by personalities when I entered, and now it's dominated by large complexes, and is less personality-driven. The changes have been dramatic, but overall investors are well-served. You get access to great managers, broad exposure to many types of securities, and it's easier to access your funds.
Mansueto was barred from talking about his love for Warren Buffet but he also admires Bill Nygren and Clyde McGregor at Oakmark, John Rogers at Ariel and Charlie Dreifus at Royce Funds, to name a few.

If you would like to read all of the interview, click here. here.  

Edited by: Casey Quinlan

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